Research from Phoenix Group’s longevity think tank, Phoenix Insights, has revealed that UK adults’ pensions knowledge is poor, and that there are significant differences in levels of knowledge.
The research found that more than half (58%) reported low confidence in their pensions knowledge. Over a quarter (28%) said they knew little or nothing about pensions. However, this rose to 41% among adults under 35. Just 11% of adults reported that their knowledge of pensions is good.
Analysis of responses showed that men were 1.4 times more likely than women to report having good pensions knowledge.
Also, nearly two-thirds (64%) of adults in the highest income bracket claimed to have good or reasonably good knowledge about pensions, compared to 30% of those in the lowest income bracket.
Patrick Thomson, head of research and policy at Phoenix Insights, commented: “Pensions are the main source of income for most people in retirement – whether this comes from the state pension or a personal pension – yet understanding is typically very poor. And we found that there are wide disparities in pensions knowledge throughout the population.
“The knowledge gap is most apparent when looking at differences in income, with those in the highest income bracket three times more likely than those on the lowest incomes to report good pensions knowledge.
“We need to close this gap so people aren’t disadvantaged when it comes to having the knowledge that allows them to make better financial decisions for their future.”
Friends, family and government websites
The research also found that most people turn to informal sources such as friends and family (18%) for information on pensions and retirement, followed by government websites (17%).
Thomson said: “Speaking to friends and family is a good way to engage with pension topics, but people need to be aware that these are informal sources of information.
“In order to boost understanding and pensions engagement, Phoenix Insights is urging the government to commit to a clear timeline for reviewing the current boundary between regulated advice and guidance, so that a larger proportion of the population can access reliable and tailored financial support.
“Let’s debunk the myth that pensions are only a concern for those nearing retirement age by engaging people with more frequent, simple and varied communications throughout the course of their life.”